Crypto

Businesses should hold two payrolls ‘worth of cash’ in crypto: Tim Draper

03/26/2023
Bitcoin Ethereum News

American venture capital investor and entrepreneur Tim Draper advised founders to keep at least two payrolls worth of cash in Bitcoin (BTC) or alternative cryptocurrencies,in response to the uncertainty created by the collapse of Silicon Valley Bank (SVB).

In a March 25 report directed at business founders, Tim Draper stated that Bitcoin is a hedge against a “domino run” on the banks and on overbearing government intervention, adding that businesses “can no longer rely” on a single bank or governing body to manage their cash.

Draper suggested that business founders keep at least “6 months of short-term cash” in two separate bank accounts – one with a local bank and another with an international bank.

He added that businesses should also have the equivalent of at least two payrolls in Bitcoin and other cryptocurrencies.

Draper explained these preventative steps were necessary as for the “first time in many years,” governments are seizing control of banks and governments themselves are “at risk of becoming insolvent.”

He warned that as boards and management are “responsible” for meeting payroll deadlines regardless, it is vital to have a diversified cash management approach. He noted:

“It is important to build out contingency plans for bank failures that could happen more and more often if the government continues to print money and whipsaw interest rates to counteract inflation caused by the over-printing of money.”

Draper stated that the reason behind implementing this plan was due to “many startups” seeking “emergency relief” from him after SVB and other banks shut down.

He also warned founders in the report to remain vigilant against fraud, noting that fraudsters are skilled at identifying weaknesses in a system and exploiting them.

Furthermore, he advised founders that phishing theft can be prevented by verifying with all parties involved whenever there is a change in wire instructions or a new approval system.

Related: Silicon Valley Bank’s downfall has many causes, but crypto isn’t one

This comes after Tim Draper performed a self-composed Bitcoin Song at the end of his keynote speech at Paris Blockchain Week 2023 on March 22.

He stated that the song was dedicated to Silicon Valley Bank and “all the banks that have failed and will fail.”

The song received a round of applause from the audience, with Draper concluding his time on stage by saying blockchain, Bitcoin and smart contracts are making up one of the “greatest transitions in the history of the world.”